Meridian positive on what new government has flagged to date

Meridian positive on what new government has flagged to
date, CEO Binns says

By Rebecca Howard

Oct. 26
(BusinessDesk) - Outgoing Meridian Energy chief executive
Mark Binns said there is a lot of detail in the coalition
proposals from Prime Minister-designate Jacinda Ardern's
government the company is keen to engage on and overall it
is positive about what has been flagged to date.

"We now
have a new government with different priorities and approach
to the previous one. I have read the coalition agreement and
there are aspects that will have implications for the
electricity sector," said Binns in speech notes for today's
annual meeting. Binns will stand down at the end of the
year and is being replaced by general manager of retail Neal
Barclay.

The incoming government's commitment to convert
the government car fleet to electric by 2025/26 where
practicable is positive, said Binns. He also noted the
coalition is committed to an independent Climate Change
Commission to advise on the setting of carbon reduction
targets and hold the government accountable for delivery.
"Meridian believes that climate change is real and tangible
action over the next year should be welcomed by
shareholders, given Meridian's commitment to NZ growing
renewables," he said.

Meridian is supportive of the new
government's emphasis on water quality but "the devil is
always in the detail, so understanding the framework within
which this will be considered is important." Freshwater is
an issue that cannot be done "piecemeal," he said.

Hopefully, by this time next year we will know how the
government intends to approach the issue given its material
importance to the New Zealand economy, he said.

Binns
said he also hopes the government will have completed its
full-scale review into retail power pricing. He noted that
competition has kept electricity prices low and is likely to
continue doing so. "If the government wanted to look at some
sacred cows for efficiency gains, it may pay them to look at
the number of network companies in New Zealand - 29 compared
to five in the state of Victoria, with a comparable
population," he said.

According to Binns, the level of
inefficiency that such a number drives into electricity
costs is significant.

He also said the government should
look at low fixed charges for low users, a policy that was
meant to help lower income households on the premise that
these households were low users. However, "when you see a
number of people here at Meridian, for example, who don't
fall into low-income households, qualify for this break -
you know it is misdirected," he said.

Outside of New
Zealand, Binns said he is looking forward to seeing
Meridian's growth initiatives in Australia, the UK and
Europe develop, given low demand growth in New Zealand.

The Australian market "is not for the faint-hearted" he
said. Meridian has just signed off on the parameters for the
final negotiation of power purchase agreements with a number
of Australian developers, potentially underwriting a number
of solar and wind projects in Victoria and New South Wales.
The arrangements are expected to be completed in coming
months, he said.

Binns said he expects "meaningful
growth" in the 2018 calendar year in the UK, where Meridian
has licensed the Powershop platform and brand to nPower and
will be adding gas functionality in January.

Meridian
is also engaging with nPower's German parent Innogy with a
view to franchising the platform in other Europen countries,
said chairman Chris Moller in his address. The aim is to
make an "in-principle" decision early next year but a final
commitment by both parties - assuming there is agreement -
could take until the middle of 2018.

Regarding guidance
for the current financial year, Moller said the company got
away to a slow start due to entering the year with depleted
water reserves following the lowest-ever hydro inflows
between February and June. However, "perversely there has
been above-average rainfall since July, not only in our
catchments but across the total country, which has seen
wholesale and forward prices fall significantly."

The
start of the year "has not been optimal, but weather
patterns can, and do, change quickly," he said.

Meridian
shares last traded at $2.825 and have gained 10.5 percent
this
year.

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